Allianz Annual Report 2012

diture incurred from the date when the intangible asset first meets the recognition criteria in the development phase. Indefinite life intangibles are not amortized but are tested for impairment at least annually or more frequently if events or changes in circumstances indicate that impair- ment may have occurred. Intangible assets with finite use- ful lives are amortized over their useful lives and are subse- quently recorded at cost less accumulated amortization and impairments. An intangible asset is impaired and a respective impairment amount is recognized to the extent the carrying amount exceeds the recoverable amount. Where it is not possible to identify separate cash flows for estimating the recoverable amount of an individual asset, an estimate of the recoverable amount of the cash generat- ing unit to which the asset belongs is used. OTHER LIABILITIES Other liabilities include payables, unearned income, provi- sions, deposits retained for reinsurance ceded, derivative financial instruments used for hedging that meet the crite- ria for hedge accounting, firm commitments, financial li- abilities for puttable equity instruments and other liabili- ties. These liabilities are reported at redemption value. Tax payables are calculated in accordance with relevant lo- cal tax regulations. EQUITY Issuedcapitalrepresentsthemathematicalpersharevalue received from the issuance of shares. Capital reserves represent the premium, or additional paid-in capital, received from the issuance of shares. Retained earnings comprise the net income of the current year, not yet distributed earnings of prior years and trea- sury shares as well as any amounts directly recognized in equity according to IFRS. Treasury shares are deducted from shareholders’ equity. No gain or loss is recognized on the sale, issuance, acquisition or cancellation of these shares. Any consideration paid or received is recorded directly in shareholders’ equity. Foreign currency translation differences, including those arising in the application of the equity method of account- ing, are recorded as foreign currency translation adjust- ments directly in shareholders’ equity without affecting earnings. the asset or disposal group and the sale should be expected to qualify for recognition as a completed sale within one year from the date of classification. Non-current assets or disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Any subsequent increases in fair value less costs to sell are recognized as a gain but not in excess of the cumulative impairment loss that has been recognized previously. A non-current asset is not de- preciated while classified as held for sale. A gain or loss on the date of the sale not previously recognized is recorded at the date of derecognition. GOODWILL AND OTHER INTANGIBLE ASSETS Intangible assets include intangible assets with indefinite useful lives like goodwill and brand names and intangible assets with finite useful lives like long-term distribution agreements and customer relationships. Goodwill resulting from business combinations is initially recorded at cost and subsequently measured at cost less accumulated impairments. Goodwill is allocated to each of the ­Allianz Group’s cash generating units expected to ben- efit from the business combination. The ­Allianz Group conducts an annual impairment test of goodwill during the fourth quarter or more frequently if there is an indication that goodwill is not recoverable. The impairment test includes comparing the recoverable amount to the carrying amount, including goodwill, of all relevant cash generating units. A cash generating unit is impaired if the carrying amount is greater than the recover- able amount. The impairment amount is allocated to first reduce any goodwill, followed by allocation to the carrying amount of any remaining non financial assets of the cash generating unit. Impairments of goodwill are not reversed. Gains or losses realized on the disposal of subsidiaries in- clude any related goodwill. Please refer to note 3, where the processes and controls for ensuring an appropriate use of estimates and assumptions are explained. Separately acquired intangible assets are initially recorded at cost which is usually its purchase price and any directly attributable costs. Intangible assets acquired in business combinations are initially recorded at fair value on the ac- quisition date if the intangible asset is separable or arises from contractual or other legal rights and its fair value can be measured reliably. Internally generated intangible as- sets are initially recorded at cost which is the sum of expen- Annual Report 2012 Allianz Group D Consolidated Financial Statements 219 Consolidated Balance Sheets 220 Consolidated Income Statements 221 Consolidated Statements of Comprehensive Income 222 Consolidated Statements of Changes in Equity 223 Consolidated Statements of Cash Flows 226 Notes to the Consolidated Financial Statements 241